Valuation Workbook: Step-By-Step Exercises and Tests to Help You Master Valuation (Paperback, 6, Revised)

About the Authors ix

Introduction xi

Part One Questions

1 WhyValueValue? 3

2 Fundamental Principles of Value Creation 5

3 Conservation of Value and the Role of Risk 9

4 The Alchemy of Stock Market Performance 11

5 The Stock Market Is Smarter Than You Think 15

6 Return on Invested Capital 21

7 Growth 25

8 Frameworks for Valuation 29

9 Reorganizing the Financial Statements 33

10 Analyzing Performance 37

11 Forecasting Performance 41

12 Estimating Continuing Value 45

13 Estimating the Cost of Capital 49

14 Moving from Enterprise Value to Value per Share 53

15 Analyzing the Results 57

16 Using Multiples 61

17 Valuing by Parts 65

18 Taxes 69

19 Nonoperating Items, Provisions, and Reserves 73

20 Leases and Retirement Obligations 77

21 Alternative Measures of Return on Capital 81

22 Inflation 85

23 Cross-Border Valuation 89

24 Case Study: Heineken 93

25 Corporate Portfolio Strategy 99

26 Performance Management 103

27 Mergers and Acquisitions 107

28 Divestitures 113

29 Capital Structure, Dividends, and Share Repurchases 117

30 Investor Communications 121

31 Emerging Markets 125

32 Valuing High-Growth Companies 127

33 Cyclical Companies 129

34 Banks 133

35 Flexibility 137

Part Two Solutions

1 Why Value Value? 143

2 Fundamental Principles of Value Creation 145

3 Conservation of Value and the Role of Risk 147

4 The Alchemy of Stock Market Performance 149

5 The Stock Market Is Smarter Than You Think 151

6 Return on Invested Capital 153

7 Growth 155

8 Frameworks for Valuation 157

9 Reorganizing the Financial Statements 159

10 Analyzing Performance 161

11 Forecasting Performance 163

12 Estimating Continuing Value 167

13 Estimating the Cost of Capital 169

14 Moving from Enterprise Value to Value per Share 171

15 Analyzing the Results 173

16 Using Multiples 175

17 Valuing by Parts 177

18 Taxes 179

19 Nonoperating Items, Provisions, and Reserves 181

20 Leases and Retirement Obligations 185

21 Alternative Measures of Return on Capital 189

22 Inflation 191

23 Cross-Border Valuation 195

24 Case Study: Heineken 197

25 Corporate Portfolio Strategy 203

26 Performance Management 205

27 Mergers and Acquisitions 207

28 Divestitures 209

29 Capital Structure, Dividends, and Share Repurchases 211

30 Investor Communications 215

31 Emerging Markets 219

32 Valuing High-Growth Companies 221

33 Cyclical Companies 223

34 Banks 225

35 Flexibility 229